THE HIGH DENOMINATION BANK NOTES (DEMONETISATION) ACT, 1978 
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ARRANGEMENT OF SECTIONS 
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SECTIONS 

1.  Short title, extent and commencement. 
2.  Definitions. 
3.  High denomination bank notes to cease to be legal tender. 
4.  Prohibition of transfer and receipt of high denomination bank notes. 
5.  Declaration of high denomination bank notes by banks and Government treasuries. 
6.  Exchange of high denomination bank notes held by banks and Government treasuries. 
7.  Exchange of high denomination bank notes held by other persons. 
8.  Exchange of notes after the time limit specified in section 7. 
9.  Closing of banks and Government treasuries. 
10.  Penalties. 
11.  Special provisions relating to offences. 
12.  Protection of action taken in good faith. 
13.  Removal of difficulties. 
14.  Power to make rules. 
15.  Repeal and saving. 
THE SCHEDULE. 

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THE HIGH DENOMINATION BANK NOTES (DEMONETISATION) ACT, 1978 

ACT NO. 11 OF 1978 

[30th March, 1978.] 

An Act to provide in the public interest for the demonetisation of certain high denomination bank 

notes and for matters connected therewith or incidental thereto. 

WHEREAS the availability of high denomination bank notes facilitates the illicit transfer of money for 
financing transactions which are harmful to the national economy or which are for illegal purposes and it 
is therefore necessary in the public interest to demonetise high denomination bank notes; 

BE it enacted by Parliament in the Twenty-ninth Year of the Republic of India as follows:— 

1.  Short  title,  extent  and  commencement.—(1)  This  Act  may  be  called  the  High  Denomination 

Bank Notes (Demonetisation) Act, 1978. 

(2) It extends to the whole of India. 

(3) It shall be deemed to have come into force on the 16th day of January, 1978. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “bank” means— 

(i) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 

1949 (10 of 1949); 

(ii) the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955); 

(iii) a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act,1959 (38 

of 1959); 

(iv)  a  corresponding  new  bank  constituted  under  section  3  of  the  Banking  Companies 

(Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970); 

(v) a regional rural bank established under sub-section (1) of section 3 of the Regional Rural 

Banks Act, 1976 (21 of 1976); 

(vi)  a  co-operative  bank  as  defined  in  section  2  of  the  Reserve  Bank  of  India  Act,  1934             

(2 of 1934); 

and includes every branch thereof; 

(b) “bank notes” means the bank notes issued by the Reserve Bank of India under section 22 of 

the Reserve Bank of India Act, 1934 (2 of 1934); 

(c)“distinctive number” in relation to a high denomination bank note means the number including 

the alphabetical and numerical prefixes appearing on the face of the note; 

(d)  “high  denomination  bank  note”  means  a  bank  note  of  the  denominational  value  of  one 
thousand  rupees,  five  thousand  rupees  or  ten  thousand  rupees,  1[issued  by  the  Reserve  Bank 
immediately before the commencement of this Act]; 

(e) “public sector bank” means a bank referred to in sub-clause (ii), (iii) or (iv) of clause (a); 

(f) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India 

Act, 1934 (2 of 1934); 

(g) “scheduled bank” means a public sector bank or any other bank, being a bank included in the 

Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934); 

(h)  “State  Bank”  means  the  State  Bank  of  India  constituted  under the  State  Bank  of  India  Act, 

1955 (23 of 1955). 

1. Subs. by Act 3 of 1999, s. 2, for “issued by the Reserve Bank” (w.e.f. 2-1-1999). 

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3. High denomination bank notes to cease to be legal tender.—On the expiry of the 16th day of 
January, 1978, all high denomination bank notes shall, notwithstanding anything contained in section 26 
of the Reserve Bank of India Act, 1934 (2 of 1934), cease to be legal tender in payment or on account at 
any place. 

4. Prohibition of transfer and receipt of high denomination bank notes.—Save as provided by or 
under this Act, no person shall, after the 16th day of January, 1978, transfer to the possession of another 
person or receive into his possession from another person any high denomination banknote. 

5.  Declaration  of  high  denomination  bank  notes  by  banks  and  Government  treasuries.—(1) 
Every bank and Government treasury shall prepare and send to the Reserve Bank in the manner provided 
in  this  section  a  return  showing  separately  under  each  denominational  value  the  total  value  of  high 
denomination bank notes of that value held by it at the close of business on the 16th day of January, 1978 
and distinctive numbers of high denomination bank notes of that value: 

Provided that a bank or a Government treasury in which the currency chest of the Issue Department of 
the Reserve Bank has been established shall also submit a separate return showing separately under each 
denominational value the total value of high denomination bank notes held in such currency chest at the 
close of business on the 16th day of January, 1978 and the distinctive numbers of high denomination bank 
notes of that value. 

(2) Every such return shall be prepared and presented as provided in sub-section (3) in triplicate and 
shall  be  signed  by  the  Manager  of  the  bank  or  other  person  in  charge  of  the  bank  or  the  Government 
treasury. 

(3) Every return under sub-section (1) shall be presented for forwarding to the Reserve Bank to the 
Manager of the sub-office, office or branch of the Reserve Bank at the places specified under sub-section 
(2) of section 7, or to the District Magistrate, or to the Sub-divisional Magistrate or, if such Manager or 
Magistrate is not available, to the senior-most Revenue or Police Officer available not later than 3.00 P.M. 
on the 17th day of January, 1978: 

Provided  that  if  it  is  not  feasible  to  present  the  return  to  any  such  person  as  aforesaid,  it  may  be 
presented by handing two copies thereof not later than 3.00  P.M. on the 17th day of January, 1978 to a 
telegraph  office,  one  copy  for  despatch  by  express  telegram  to  the  Reserve  Bank  at  Bombay  at  the 
expense of the bank or the Government treasury, as the case may be, and the other copy for return to the 
person presenting it in the manner provided in sub-section (4), and by despatching the third copy required 
by sub-section (2) by registered post on the same day to the Reserve Bank at Bombay. 

(4) The officer to whom the return is presented shall give back to the person presenting it one copy 
thereof  under  his  signature  and  seal  of  office  in  acknowledgement  of  receipt  on  which  shall  also  be 
recorded the time and date of receipt, and such officer shall without delay forward one copy of the return 
to the Reserve Bank at Bombay. 

(5) The Manager or other person in charge of every bank or Government treasury shall, immediately 
after  the  preparation  of  the  returns  required  to  be  submitted  under  this  section,  cause  the  high 
denomination bank notes mentioned therein to be kept in a separate receptacle and seal the same with his 
seal and of the officers having custody of such receptacle. 

6. Exchange of high denomination bank notes held by banks and Government treasuries.—(1) 
A  bank  other  than  a  public  sector  bank  may  obtain  from  the  Reserve  Bank  or  a  public  sector  bank  an 
equivalent amount in exchange for the high denomination bank notes declared by it in the return referred 
to in section 5 by credit to an account maintained with the Reserve Bank or a public sector bank or in 
bank notes. 

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(2) A public sector bank may obtain from the Reserve Bank an equivalent amount in exchange for the 
high denomination bank notes declared by it in the return referred to in section 5 or the high denomination 
bank notes received by it in exchange under sub-section (1) by credit to an account with the Reserve Bank 
or in bank notes. 

(3) A Government treasury may obtain from the Reserve Bank an equivalent amount in exchange for 
the high denomination bank notes declared by it in the return referred to in section 5 in bank notes or by 
credit to Government account. 

(4) Notwithstanding anything contained in sub-sections (1), (2) and (3), where the return referred to in 
section  5  is  presented  in  the  manner  provided  in  the  proviso  to  sub-section  (3)  of  that  section,  the 
exchange referred to in this section may be effected only by the Reserve Bank at Bombay. 

(5) Every application for the exchange of high denomination bank notes under this section shall be 
accompanied  by  the  copy  of  the  return  received  under  sub-section  (4)  of  section  5  which  contains  the 
distinctive numbers of such bank notes. 

7.Exchange  of  high  denomination  bank  notes  held  by  other  persons.—(1)  Notwithstanding 
anything  to  the  contrary  contained  in  the  Reserve  Bank  of  India  Act,  1934  (2  of  1934),  any  high 
denomination bank note owned by a person other than a bank or Government treasury may be exchanged 
after the 16th day of January, 1978, only on tender of the note— 

(a) where the high denomination bank note is owned by an individual, by the individual himself; 
or  where  the  individual.  is  absent  from  India,  by  the  individual  concerned  or  some  person  duly 
authorised by him in this behalf; or where the individual is mentally incapacitated from attending to 
his affairs, by his guardian or by any other person competent to act on his behalf; 

(b) where the high denomination bank note is owned by a Hindu undivided family, by the karta, 
and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by 
any other adult member of his family; 

(c)  where  the  high  denomination  bank  note  is  owned  by  a  company,  by  the  managing  director 
thereof, or, where for any unavoidable reason such managing director is not able to tender the note, 
or; where there is no managing director, by any director thereof; 

(d) where the high denomination bank note forms part of the assets of a firm, by the managing 
partner thereof, or, where for any unavoidable reason such partner is not able to tender the note, or 
where there is no managing partner as such, by any partner thereof not being a minor; 

(e) where the high denomination bank note is owned by any other association of persons, by any 

member of the association or the principal officer thereof; and 

(f) where the high denomination bank note is owned by any other person, by that person or by 

some person competent to act on his behalf;  

and within the time and in the manner provided in this section. 

(2) Every person desiring to tender for exchange a high denomination bank note under this section 
shall prepare in the form set out in the Schedule three copies of a declaration signed by him giving in full 
the particulars required by that form and shall, not later than the 19th day of January, 1978, deliver such 
copies in person together with the high denomination bank notes he desires to exchange— 

(a) to either of the offices of the Reserve Bank at Bombay or to the sub-office, office or branch, 
as  the  case  may  be,  of  that  bank  at  Ahmedabad,  Bangalore,  Bhubaneshwar,  Calcutta,  Gauhati, 
Hyderabad, Jaipur, Kanpur, Madras, Nagpur, New Delhi and Patna; or 

(b) to the main office or branch of the State Bank at the headquarters of a district; or 
(c) to any other office of a public sector bank notified in this behalf by the Reserve Bank: 

Provided  that  if  such  person  resides  in  a  place  not  within  convenient  reach  of  any  such  office  or 
branch, or if, by reason of age, infirmity or illness he is unable to attend thereat, he may forward the high 
denomination bank notes he desires to exchange together with three copies of the declaration in respect 
thereof by insured post to the Reserve Bank at Bombay not later than the 19th day of January, 1978. 

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(3) Every declaration under this section shall, for the purpose of identifying the person making it, be 
attested by the manager or other person in charge of the bank, if any, with which he maintains an account, 
or by a salaried Magistrate or a Justice of the Peace or a police officer not below the rank of an Inspector 
of Police. 

(4) Unless it appears that the declaration has not been complete in all material particulars, the Reserve 
Bank,  the  State  Bank  or  any  bank  notified  under  clause  (c)  of  sub-section  (2),  as  the  case  may  be,  to 
which an application for exchange of high denomination bank notes is made under this section, shall pay 
the  exchange  value  of  the  said  notes  for  credit  to  a  properly  introduced  account  of  the  owner  or  the 
declarant, as the case may be, with any scheduled bank: 

Provided  that  if  the  owner  or  declarant,  as  the  case  may  be,  does  not  have  a  bank  account,  the 
exchange value of the said notes shall be paid only on proper identification and until payment is so made, 
the amount shall remain in the custody of the Reserve Bank or the bank, as the case may be, to which the 
high denomination bank notes were tendered. 

(5)  Where  it  appears  that  the  declaration  has  not  been  completed  in  all  material  particulars,  the 
Reserve  Bank,  the  State  Bank  or  the  notified  bank,  as  the  case  may  be,  to  which  such  application  as 
aforesaid is made shall, unless the declarant is able to supply the omission without delay, refuse to accept 
and pay for the bank notes to which the declaration relates, and where it does so refuse, shall return one 
copy of the declaration to the declarant after entering therein the date on which it is presented and shall 
refer the matter to the Central Government to which it shall forward a copy of the declaration with a brief 
statement of the reasons for refusing to pay for the bank notes. 

(6) The Central Government may require any declarant referred to in sub-section (5) to amplify his 
declaration to such extent and in respect of such particulars as it thinks fit and may, unless the declarant is 
able to fully comply with such requirement, refuse, for reasons to be recorded in writing, to sanction the 
exchange of the high denomination bank notes to which the declaration relates. 

(7) The Central Government or any person or authority authorised by it in this behalf may, by order in 
writing  and  for  reasons  to  be  recorded  therein,  extend  in  any  case  or  class  of  cases  the  period  during 
which high denomination bank notes may be tendered for exchange under this section. 

8.Exchange  of  notes  after  the  time  limit  specified  in  section  7.—(1)  Notwithstanding  anything 
contained in section 7, any person who fails to apply for exchange of any high denomination bank notes 
within the time provided in that section may tender the notes together with the declaration required under 
that  section  to  the  Reserve  Bank  at  any  of  the  places  specified  in  clause  (a)  of  sub-section  (2)  of  that 
section, not later than the 24th day of January, 1978 together with a statement explaining the reasons for 
his failure to apply within the said time limit: 

Provided that if such person resides in a place not within convenient reach of the sub-office, office or 
branch  of the  Reserve  Bank  at  any  of  the  said places  or  if,  by  reason of age,  infirmity  or illness,  he  is 
unable  to  attend  thereat,  he  may  forward  the  high  denomination  bank  notes  he  desires  to  exchange 
together with three copies of the declaration required under section 7 by insured post to the Reserve Bank 
at Bombay not later than the 24th day of January, 1978, along with a statement explaining the reasons for 
his failure to apply within the time specified in section 7. 

(2) The Reserve Bank may, if satisfied after making such inquiries as it may consider necessary that 
the  reasons  for  the  failure  to  submit  the  notes  for  exchange  within  the  time  provided  in  section  7  are 
genuine, pay the value of the notes in the manner specified in sub-section (4) of that section. 

(3) Any person aggrieved by the refusal of the Reserve Bank to pay the value of the notes under sub-
section (2) may prefer an appeal to the Central Government within fourteen days of the communication of 
such refusal to him. 

9.Closing of banks and Government treasuries.—(1) All banks and Government treasuries shall be 
closed  on  the  17th  day  of  January,  1978  for  the  transaction  of  all  business  except  the  preparation  and 
presentation or, as the case may be, receipt of the returns referred to in section 5. 

(2) Subject to the provisions of sub-section (1), the 17th day of January, 1978 shall, for the purposes 
of the Negotiable Instruments Act, 1881 (26 of 1881), be deemed to be a public holiday notified under 
that Act. 

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10.Penalties.—(1)  If  any  bank  fails  to  prepare  and  present  within  the  time  and  in  the  manner 
provided by section 5 any return referred to in that section, or presents any return under that section which 
is  false  in  any  material  particular,  the  manager  or  other  person  in  charge  of  the  bank  shall,  unless  he 
proves  that  the  failure  took  place,  or  the  false  return  was  presented,  without  his  knowledge  or  that  he 
exercised all due diligence to prevent the same, be punishable with imprisonment for a term which may 
extend to three years, or with fine, or with both. 

(2) Whoever knowingly makes in any declaration under section 7 any statement which is false or only 
partially true or which he does not believe to be true or contravences any provision of this Act or the rules 
made thereunder shall be punishable with imprisonment for a term which may  extend to three years or 
with fine or with both. 

(3) An officer of a scheduled bank who makes payment out of the amount, being the exchange value 
of a high denomination bank note credited under sub-section (4) of section 7 to an account  maintained 
with such bank shall unless such account is an account which has been opened after proper introduction, 
be punishable with imprisonment for a term which may extend to three years, or with fine, or with both. 

11.Special provisions relating to offences.—(1) No prosecution for an offence punishable under this 

Act shall be instituted except with the previous sanction of the Central Government. 

(2) Notwithstanding anything in section 29 of the Code of Criminal Procedure, 1973 (2 of 1974), the 
court  of  a  Magistrate  of  the  first  class  or  the  court  of  a  Metropolitan  Magistrate  trying  an  offence 
punishable under this Act may impose a fine exceeding five thousand rupees. 

12.Protection of action taken in good faith.—No suit, prosecution or other legal proceeding shall 
lie against the Government or any officer of the Government or against the Reserve Bank or any public 
sector bank or any officer of such bank for anything done or intended to be done in good faith under this 
Act. 

13.Removal of difficulties.—If any difficulty arises in giving effect to the provisions of this Act, the 
Central Government may, by notification in the Official Gazette, make any order, not inconsistent with 
the provisions of this Act, which appears to it to be necessary for the purpose of removing the difficulty: 

Provided that every such order shall, as soon as may be after it is made, be laid before each House of 

Parliament. 

14.  Power  to  make  rules.—(1)  The  Central  Government  may  make  rules  for  giving  effect  to  the 

provisions of this Act. 

(2)In  particular  and  without  prejudice  to  the  generality  of  the  foregoing  power,  such  rules  may 

provide for all or any of the following matters, namely:— 

(a) the custody and disposal of high denomination bank notes tendered for exchange under this 

Act and of the declarations in respect thereof; 

(b) the time within  which applications referred to in sub-section (5) of section 6 may be made; 

and 

(c)  the  time  within  which  and  the  manner  in  which  the  State  Bank  and  public  sector  banks 
notified under clause (c) of sub-section (2) of section 7 may claim reimbursement from  the Reserve 
Bank of payments made by them in respect of high denomination bank notes accepted by them under 
that section. 

(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it 
is made, before each House of Parliament while it is in session for a total period of thirty days which may 
be comprised in one session or in two or more successive sessions, and if, before the expiry of the session 
immediately following the session or the successive sessions aforesaid, both Houses agree in making any 
modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter 
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such 
modification or annulment shall be without prejudice to the validity of anything previously done under 
that rule. 

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15.Repeal and saving.—(1) The High Denomination Bank Notes (Demonetisation) Ordinance, 1978 

(1 of 1978) is hereby repealed. 

(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed 

shall be deemed to have been done or taken under the corresponding provisions of this Act. 

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THE SCHEDULE 

[See section 7(2)] 

FORM OF DECLARATION 

(To be filled in triplicate) 

1. Name of the owner of the bank notes 

(In block letters) 

2. Address: Office 

Residence 

3. Status, i,e., whether individual, Hindu undivided family, company, firm, etc. 

4.(a) Whether assessed to income-tax; 

(b) If so, name of the Income-Tax Circle/Ward/District where last assessed; 

(c) Permanent Account Number. 

5. If engaged in business, profession or vocation, name in which such business is carried on. 

6. Principal place of business, profession or vocation, and location and style of each branch. 

7. In the case of a firm, name and address of each partner. 

8. In the case of partner in a firm, name and address of each firm or firms in which he is a partner. 

9. In the case of a salaried person, amount of salary per annum. 

10. In the case of a Government employee, Government Department and post held. 

11.  In  the  case  of  a  retired  Government  employee,  last  post  held,  Government  Department  under 

which such post was held and date of retirement. 

12. In the case of a retired employee of a non-Government employer, particulars of last post held. 

13.  In  the  case  of  any  other  person,  particulars  of  profession  or  vocation  or,  as  the  case  may  be, 

former profession or vocation. 

14. Particulars of high denomination bank notes tendered. 

Denomination 

Number of Notes 

Distinctive 
Numbers* 

Total value 

Rs. 1000 

Rs. 5000 

Rs. 10000 

*Distinctive  numbers  of  bank  notes  tendered  should  be  furnished  indicating  alphabetical  and 
numerical prefixes of the notes. Attach a statement if space is not adequate. 

Rs.  Rupees (in words) 

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15. Reasons for keeping the amount in cash in notes of such high denominations 

16. When and from what source did the bank notes come into possession? 

17.  If  any  of  the  notes  tendered  represent  borrowings,  the  name(s)  and  address  (es)  of  the  persons 

from whom borrowed and the dated on which borrowed. 

18. Manner in which payment of value of the bank notes is desired; i.e., in cash or payment to bank, 

etc. 

19. If payment is to be made into a bank account, full details of the bank account. 

20. Has any other declaration been made in respect of other bank notes of the owner? If so, state full 

particulars. 

21. If the declarant is not the owner of the bank notes, capacity in which declaration is signed. 

I, _______________________, son/daughter/wife of __________________hereby solemnly declare  

(name in block letters)(name of father/husband) 

that the particulars furnished above are full, true and correct to the best of my knowledge and belief. 

I further declare that the bank notes tendered herewith belong to me ______________ 

to _______________________and are not held benami. 

name of owner of bank notes  

I also solemnly affirm that I have __________________________________________________ 

filed another/other declaration(s) as per particulars attached. 

not filed any other declaration under this Act. 

I 

further 

as 
____________________________and  that  I  am  competent  to  make  this  declaration  and  verify  it, 
designation, etc. 

am  making 

declaration 

in  my 

capacity 

declare 

that 

this 

I 

Place: ____________ 

Date: ____________ 

____________________________________________________________________________________ 

I, _________________________________hereby testify that I know the declarant and certify that the  

..................................... 

(Signature of declarant) 

(name in block letters) 

above declaration was signed in my presence. 

Place: ______________ 

Date: ______________ 

SEAL 

..................................... 

(Signature and designation) 

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